DraftKings Persuing Sports Betting Partners In New Jersey

DraftKings Persuing Sports Betting Partners In New JerseyAccording to a recently released report from Eilers & Krejcik Gaming, one of the global gambling industry’s top level research firms, leading daily fantasy sports operator DraftKings is pursuing partnerships with casino operators to provide sports betting options in New Jersey.

Eilers & Krejcik’s report indicates that DraftKings is preparing to enter the sports betting marketplace should that industry be more widely open in the event that the Professional and Amateur Sports Protection Act of 1992 (PASPA) is declared unconstitutional by the U.S. Supreme Court. If that key federal anti-sports wagering law is stricken from the rolls either by virtue of a SCOTUS decision or a repeal by the U.S. Congress (that would be the Plan B if the Supreme Court doesn’t come through), then sports betting would become widely legal around the country. In that instance, daily fantasy sports (DFS) operators, of which DraftKings is the undisputed monarch, were long expected to pivot into more of a sports betting direction, but the news that developments have already progressed to the point that DraftKings are in talks with Atlantic City casinos is big news indeed.

As for DraftKings CEO Jason Robins, he recently told the CNNMoney online publication that his company’s plan – though as yet unspecified – to expand into becoming or at least offering a full on sports betting option for its estimated 10 million players is an exciting prospect. Though the Eilers & Krejcik report calls it a “rumor” only, the details of the report itself are adamant in the way the DraftKings executives are “aggressively shopping for sports betting partnerships in the New Jersey market.” The report contends that DraftKings is looking to position itself as a so called “one-stop solution for land based operators looking for a way to offer sports betting” at brick and mortar casinos and online as well.

“It’s a huge market that has the opportunity to create lots of new players, lots of new revenue and really open up things in a way that they never have been before in the United States,” Robins told the reporters at CNN.

That opening up could come as early as the afternoon of April 2, coincidentally the day the 2018 NCAA Men’s Basketball “March Madness” Tournament is set to conclude. The Supreme Court was supposed to be hearing various cases all day in closed sessions, so any announcement about PASPA – and consequently the future of widely legal sports betting outside of the Las Vegas Strip – will have to wait until then. However, the indications are good, and everybody in the know knows that the whole thing is riding on the Supreme Court’s decision, which could theoretically open up a whole can of worms (or cans, in this case) of other issues involving the doctrine of Equal Sovereignty and broader questions related to States’ Rights.

The thing is, a decision like that from the Supreme Court – that a federal law is in violation of the constitutionally guaranteed rights of individual states to make their own laws in areas not directly under federal primacy (and questions of gambling definitely qualifies there) – has only happened a handful times. Four times to be exact. So despite the overwhelmingly favorable attitude of millions upon millions of sports fans in America and even the relatively newfound support for broadly legalized sports betting among the leadership of the major sports leagues, it is still a bit of a long shot for the SCOTUS to rule in favor of sports betting.

Draftkings might not have revealed the particulars of its plan, but the Eilers & Krejcik report did elucidate some telling clues as to what Robins and co. have in store for a possibly post-PASPA world (at least in New Jersey). The report specifically mentions that the DFS leader, which recently opened a new Garden State head office in Hoboken, New Jersey, roughly seven hours’ drive from the state’s seven casinos in Atlantic City. Additionally, DraftKings has gone as far as to hire a “Head of Sportsbook” to run its nascent operations in that milieu, and both of those details seem to indicate that the company is looking to do more than just create a sportsbook division without much to do.

On the contrary, these moves lend credence to the belief held by other industry analysts, longtime DFS players and other concerned parties that DraftKings may be looking to strengthen its solid technological assets and know how when it comes to attracting players in order to shift into a proper sportsbook should the opportunity arise. That said, the Eilers & Krejcik report did mention that DraftKings has not developed any sportsbook specific technology that anyone has ever seen, which we think could mean the company may not be interested in passing along its edge in that regard to casino operators.

DraftKings might actually be keener to work out a deal to have a casino in Atlantic City to provide it with a sports betting platform for it to apply its own brand to, a move that might make even better sense in the short term. That would give DraftKings plenty of time to develop its own proprietary sports wagering interface at some point down the road while still gaining the company crucial market exposure and enabling it to leverage the credibility it already has in DFS circles.

Furthermore, several of the nearly two dozen states that are looking to pass or have already passed legislation to legalize sports betting are calling for or at least considering only allowing current operators to obtain coveted sports betting licensure. Additionally, because DraftKings is an exclusively online enterprise, it could work as a great “intermediary” of sorts between established casino gambling operations looking to get into sports betting as these same proposals indicate a wariness on the part of lawmakers to dive headfirst into the online sports wagering scene. DraftKings, theremore, might soon find itself in a “best of all worlds” situation in which it provides a valuable resource to prospective partners among the New Jersey casinos and gets some valuable time to work on its own sports betting offering in the future.

Our take is that DraftKings, one of the foremost names when it comes to brand awareness in the collective mind of the sports enthusiast public, would be crazy if it did not have plans laid to pivot into the sports betting space in sports betting states. That isn’t to say that DraftKings should drop daily fantasy altogether, and there has been no indication that this is the plan, but it should at least offer a solid product that allows the company’s millions of users to have access to sports betting. Assuming that PASPA is repealed by the Congress or declared unconstitutional by the Supreme Court by no later than June, as former New Jersey Governor Chris Christie told reporters he thinks it will be, DraftKings is almost ideally suited to slide right into this segment and make a killing doing it.